Streaming Music Service Deezer Puts Faith in Curated Feeds

By Robin Wauters

Nick Mason, Pink Floyd’s drummer, is speaking at the WSJ Tech Cafe on Wednesday on the future of the music industy. Mark Foster, Deezer Managing Director, will be speaking after him.

Mark Foster is part of the music panel at the WSJ Tech Cafe on Wednesday Sept. 25 at 2.30pm

Mark Foster, managing director of the U.K. and Ireland for Paris-based streaming service Deezer, is a veteran of the music industry, working as marketing manager for a wide variety of record labels as far back as the second half of the 1980s.

After a seven-year stint at Warner Music–the owner of which, Access Industries, coincidentally invested $130 million in Deezer about a year ago–Mr. Foster went on to work at startups and establishing a digital strategy and marketing consultancy before joining Deezer in May 2011.

Deezer opened for business in the U.K. in September 2011, followed by Ireland in December that year as part of a wider international roll-out.

The music streaming service is now available in more than 180 territories worldwide, and Deezer claims over 10 million people tune in every month.

Deezer has been growing at a rapid clip in recent years, adding newly supported territories and beefing up its music catalog. Can you share some specific user, subscriber or growth numbers for the U.K. and Ireland?

There is a certain amount of confidentiality we are obliged to respect regarding detailed numbers, but suffice to say, we are now (already) the second biggest music-on-demand subscription service in the U.K., which is a significant achievement given that we’ve only been here for two years, and only launched our “freemium” tier last Christmas.

Our partnership with Orange/EE has been very successful, and we are building our stand-alone brand and business very fast, with particular success, as you might expect, in people trialling and signing up via our mobile apps.

The common allegation that digital music streaming services are actually hurting artists doesn’t seem to be going away any time soon. How does Deezer ensure that all musicians and composers are fairly compensated for their work?

We negotiate in-good-faith agreements with all rights-holders (record companies and publishers) to ensure that all artists and composers are fairly remunerated based on market rates that the rights-holders set.

Obviously, streaming is still a relatively new means of both promoting artists’ work and remunerating them for it, and the revenue model is very different to a single-price-for-a-single-unit (be that a physical unit or a download), so it is understandable that there would have been some initial concerns about how it fits in with, say, radio play or download sales.

But at least two of the major record companies have stated that, based on their research, there is no evidence that streaming cannibalizes sales in other formats, and I think most people now see that both the promotional opportunities and the revenues are incremental to other formats.

Our expectation is that rights-holders pass on the additional revenue we are generating for them to their artists in a transparent and honest fashion, but we do not pay the artists directly, of course. And as our numbers grow, so does the enthusiasm of artists and record labels to benefit from the promotional opportunities we offer.

Deezer is well-financed but faces stiff competition from the likes of Spotify, Rdio, Blinkbox (formerly We7) and Grooveshark, not to mention juggernauts like Microsoft with its Xbox Music subscription service and Google with Google Play Music. How is Deezer different?

As well as making our service as ubiquitous as possible (“any time, anywhere, any device”) we also place heavy emphasis on trusted, curated discovery.

We want to connect more people with more music, in more ways, and help artists reach out to new fans, and have strong, knowledgeable teams of editorial people doing just that, every day.

We are also the most geographically widespread streaming service, by some distance, now available in over 180 territories. I think our nearest competitor is in just over 30.

The online music subscription space is relatively young but highly competitive, and many have faltered trying to come out on top, among others Napster, imeem, eMusic, MOG and Microsoft with Zune. How can Deezer avoid their fate?

By playing to our strengths. We are first and foremost a music company, with strong editorial, we are ubiquitous, and have strong content and distribution partners (we are now partnered with nearly 30 mobile phone operators around the world, which gets us to scale very quickly in many markets, and provides us with marketing support and brand awareness) and operating a sustainable business model.

Digital music streaming is taking off, and more people are getting accustomed to subscribing for on-demand access. But, while some companies are seeing rapid growth and decent income, nobody has yet proven that this can be a tremendously profitable business. Would you agree, and how do you see this evolving in the future?

Clearly, we need the support of the industry, and to work with them so that prices are right–so that there is enough revenue in the value chain to remunerate artists fairly, but also to leave enough margin to allow digital music companies to be sustainable.

The fragmentation of digital rights is a challenge that we are trying to address, to streamline both the licensing process and the revenues. And we need to get our marketing right, to show consumers that streaming is a convenient, easy-to-use way of listening to music wherever they like (and offers a legal, and better, alternative to piracy).

Comments (1 of 1)

Streaming services are run by a bunch of Charlatans, using music as a commodity to sell advertising, yet again musicians are being screwed by a bunch of oppurtinists to feather there own nest.
Don't buy into it.

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